2007-12-17 12:36:35 · 4 answers · asked by burlingtony 2 in Business & Finance ➔ Personal Finance
what you would or should is up to you, but the lenders typicaly want to see less than 50% DTI this includes all monthly payments shown on your credit report. but if you are looking for advice i would keep your total DTI under 40%. i have written many mortgages to people that insist on pushing the lenders limits and i have watched them get in trouble. but the ones that keep that number under 40% and especially under 30% have faired much better in the long run.
2007-12-17 12:48:08 · answer #1 · answered by explosurenet 2 · 0⤊ 0⤋
I personally prefer to measure total expenses (including debt payments) vs. income after taxes. I think that's a much more accurate way to determine what's comfortable.
If my non-loan payment expenses (utilities, car expenses, food, etc.) are only 50% of my after-tax income, then I'd be OK with paying 40% of income in loan payments because I'd still be spending less than I'm bringing home.
On the other hand, if my non-loan expenses are 80% of my after-tax income, then anything higher than 10% for loan payments would make me uncomfortable.
My bottom line is that I want enough money left over after all taxes and all expenses that I can save some and have enough money in reserve that if, for example, the refrigerator and washer both need to be replaced in the same month, I can handle that without having to eat Ramen noodles every night or pay less than the full balance on my credit card bill and risk getting into the death spiral of debt that credit card interest can cause.
And I agree with the first answer that debt for anything other than a home mortgage should be avoided. Borrowing money against depreciating assets like cars, boats, TVs, clothes, etc. is not financially wise. Car loans might be necessary for young people just starting out, but I'd work very hard to make sure that when that first car needs to be replaced, I can buy the next one without a loan.
2007-12-17 20:54:17 · answer #2 · answered by Dave W 6 · 0⤊ 0⤋
25% for home mortgage only.
0% is the correct amount for everything else.
2007-12-17 20:46:19 · answer #3 · answered by Anonymous · 0⤊ 0⤋
ZERO debt sounds good to me.
2007-12-17 22:16:09 · answer #4 · answered by STEVEN F 7 · 0⤊ 1⤋